The legalization of recreational marijuana in California has proven to be monetarily successful, but new opportunities have risen, the warehouses in which the cannabis is grown is creating a gold rush. This is because cannabis grown indoors is usually more consistent and has higher concentrations of THC, as opposed to outdoor grown pot.
Because marijuana is still illegal under federal law, it is hard to invest in trading the actual plant but there has also been a rising demand in warehouses for growing the plant. Jonathan Petersen, an analyst at Jefferies states, “Rent growth is very strong and they have some occupancy to lease up at higher rates.” “Warehouse rents jumped 10 percent I Colorado after legal marijuana sales began in 2014” according to CBRE Inc., a real estate data firm. There is a rise in the number of funds that own shares of warehouse companies in California. Prologis, the largest warehouse REIT overall, has about 20 percent of its portfolio in California, and it increased over 11 percent over the last quarter, according to Morningstar data.
“Shares of industrial warehouse companies such as Prologis Inc., Rexford Industrial Realty Inc. and Terreno Realty Corp that have significant exposure to the California market should benefit even if they do not lease to marijuana companies directly, fund managers and analysts say.” “Shares of Terreno and Rexord are both up approximately 9 percent and shares of Prologis are up 4 percent over the same time, even as they offer lower yields has the average 3.6 percent of the S&P Real Estate sector,” “Innovative Industrial Properties Inc., the first REIT that focuses on warehouses for regulated medical use marijuana production began trading on Dec. 1 at an IPO price of $20 per share. Shares had eased to $17.50 as of Tuesday Afternoon” according to Reuters.